10-year Treasury yield jumps back above 4.5% after March inflation tops estimates

The 10-year Treasury yield jumped back above 4.5% on Wednesday after March inflation data came in hotter than expected, adding to the likelihood of higher-for-longer interest rates from the Federal Reserve.

The yield on the 10-year Treasury was last higher by more than 13 basis points at 4.495%, after topping 4.5% earlier in the session. The yield on the 2-year Treasury was last at 4.943% after climbing more than 19 basis points.

Yields and prices move in opposite directions, and one basis point is equivalent to 0.01%.

The March consumer price index that came out Wednesday showed a reacceleration of inflation from the prior month. CPI gained 0.4% from February, and rose 3.5% on a yearly basis. Economists polled by Dow Jones had been looking for a 0.3% gain and a 3.4% increase from the previous year.

Core CPI, which excludes volatile food and energy prices, jumped 0.4% on a monthly basis while rising 3.8% from a year ago. That’s compared to estimates for 0.3% and 3.7%, respectively.

Stubborn inflation adds to expectations the Fed may not move to lower interest rates as soon as June after other recent data showed a robust economy that’s stopping annual price gains from easing back to the central bank’s 2% target.

“Everyone was looking for shelter costs to come down but they’re not cooperating. We have a strong economy, with tight inventories and pricing power for companies,” said David Russell, global head of market strategy at TradeStation. “That’s now turning into a double-edged sword, making inflation stickier than we hoped. Rate cuts could be out the window.”

Minutes from the Fed’s latest meeting are also due out on Wednesday and will provide additional insights into policymakers’ thinking and into their expectations for the economy and monetary policy.

The latest consumer inflation report comes ahead of the March producer price index set to be released on Thursday.

— CNBC’s Jeff Cox contributed to this report.